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Tourism and Employment in Albania – Is There a Strong Correlation?

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Tourism and Employment in Albania – Is There a Strong Correlation? 13th International Conference of ASECU Social and Economic Challenges in Europe 2016-2020 TOURISM AND EMPLOYMENT IN ALBANIA – IS THERE A STRONG CORRELATION? Leida Matja1 Brunilda Liçaj2 ABSTRACT Tourism is undoubted a driving force for Albanian Economy. The fast pace growing industry which provides 19.3 per cent of the total employment and contributes more than 20 per cent on Albanian GDP is considered strategic for the future development of the country. Statistics provide figures that show a correlation between the number of visitors and the number of people employed in the industry that is one of the reasons why this industry is quickly growing. But there are no evidences, nor empirical measures that prove a correlation between the overall country‘s employment and the number of foreign visitors arriving in Albania every year. The objective of the paper is to measure the contribution of Tourism to the economy of the country with emphasis on wellbeing of Albanians. The methodology of the research varies from desk research to empirical tests in order to test the correlation between the overall country employment and number of foreign visitors arriving annually in Albania. This way the results will show theoretically and empirically how strong Tourism economy is linked to almost every strategic sector of the country giving Tourism not only a strategic and important weight in the GDP but proving that it has a multiplier and stimulating effect on the whole Albanian economy and especially on the welfare of Albanian citizens. Keywords: tourism, employment, welfare, VAR model JEL Classification: Z320 1. Tourism Importance Overview For decades tourism industry growth has been a major contributor to increased economic activity throughout Albania. and the world. It has created jobs in both large and small communities and is a major industry in many places. It is the dominant economic activity in some communities. According to the World Travel and Tourism Council3, the Travel & Tourism continued to show its resilience in 2016, contributing direct GDP growth of 3.1% and supporting 6 million net additional jobs in the sector. In total, Travel & Tourism generated US$7.6 trillion (10.2% of global GDP) and 292 million jobs in 2016, equivalent to 1 in 10 jobs in the global economy. The sector accounted for 6.6% of total global exports and almost 30% of total global service exports. For the sixth successive year, growth in Travel & Tourism outpaced that of the global economy 1 Dr, University “Aleksandër Moisiu”, Faculty of Business, Tourism Department, Durrës, Albania, e mail: [email protected] 2 Dr, University “Aleksandër Moisiu”, Faculty of Business, Tourism Department, Durrës, Albania, e mail: [email protected] 3 WTTC Report 2017 408 13th International Conference of ASECU Social and Economic Challenges in Europe 2016-2020 (2.5%). Additionally in 2016, direct Travel & Tourism GDP growth not only outperformed the economy-wide growth recorded in 116 of the 185 countries covered by the annual economic impact research (including in major Travel & Tourism economies such as Australia, Canada, China, India, Mexico and South Africa), but it also was stronger than the growth recorded in the financial and business services, manufacturing, public services, retail and distribution, and transport sectors. Most people think of tourism in terms of economic impacts, jobs, and taxes. However, the range of impacts from tourism is broad and often influences areas beyond those commonly associated with tourism. Leaders as well as residents who understand the potential impacts of tourism can integrate this industry into their community in the most positive way. 1. Economic 2. Environmental 3. Social and cultural 4. Crowding and congestion 5. Services 6. Taxes 7. Community attitude Each category includes positive and negative impacts. Not all impacts are applicable to every community because conditions or resources differ. Community and tourism leaders must balance an array of impacts that may either improve or negatively affect communities and their residents. Leaders must be sensitive and visionary, and must avoid the temptation of glossing over certain difficulties tourism development creates. Tourism leaders must also balance the opportunities and concerns of all community sectors by working against conditions where positive impacts benefit one part of the community (geographic or social) and negative impacts hurt another. Conversely, community sensitivity to tourism means avoiding undue burdens on the industry that could thwart its success. Local leaders should not expect tourism to solve all community problems. Tourism is just one element of a community. While creative strategic development of tourism amenities and services can enhance the community or correct local deficiencies, tourism, like all business development, must assure that its products (attractions and services) attract customers. Overbearing rules and restrictions, and overburdening taxes can make tourism businesses less attractive or competitive. 2. Tourism and Employment in Albania It is a well known fact that Tourism undoubtly contributes substantially to income and employment generation in Albania. Travel and Tourism are major controbutors and GDP and Employment. 4 ✁ In the WTTC Report Travel and Tourism Economic Impact 2017, Albania it is stated that the direct contribution of Travel & Tourism to GDP was ALL127.7bn (USD1.0bn), 8.4% of total GDP in 2016, the total contribution of Travel & Tourism to GDP was ALL393.0bn (USD3.2bn), 26.0% of GDP in 2016. In 2016 Travel & Tourism directly supported 85,500 jobs (7.7% of total employment).. 4WTTC: Travel and Tourism Economic Impact 2017, Albania 409 13th International Conference of ASECU Social and Economic Challenges in Europe 2016-2020 In 2016, the total contribution of Travel & Tourism to employment, including jobs indirectly supported by the industry was 23.9% of total employment (267,000 jobs). This is expected to rise by 3.2% in 2017 to 275,500 jobs and rise by 2.9% pa to 368,000 jobs in 2027. From the figures above we may deduct that undoubtly Tourism is one of the major sectors of economy providing employment to a large number of population. The induced and satellite effect of Tourism make that the number of employees working in industries closely related to tourism activities are almost one quarter of the entire active workforce of Albania. Consequently Tourism may induce employment to other sectors. But the aim of this paper is to verify how large such effects may be extended for the Albanian economy. Is the development of Tourism in Albania linked closely with employment or it does not substantially influence in the overall situation of country‘s employment. The method choosed to verify the connection between two factors in the VAR method. To start the analysis of the correlation we have examined two variables Number of visitors arrived and employment in time series. The data are provided in time series and specifically are shown in the tables below. Table 1: Number of Tourist arrivals and total employed in Albania5 No of Employed in Public Sector, Non No. of Tourist Years agricultural and arrivals agricultural private sector 2000 317,149 1,068,190 2001 354,000 920,569 2002 470,574 920,144 2003 558057 926,225 2004 645409 931,217 2005 747,837 932,102 2006 937,038 935,058 2007 1,126,514 939,000 2008 1,419,191 901,708 2009 1,855,634 905,088 2010 2,417,337 904,210 2011 2,932,132 925,242 2012 3,513,666 959,227 2013 3,255,988 916,916 2014 3,672,591 925,262 2015 4,131,242 972,621 2016 4,735,511 1,042,810 5Source: INSTAT 410 13th International Conference of ASECU Social and Economic Challenges in Europe 2016-2020 The employment creation aspect of tourism is another vital contributor to promulgating economic growth and development of the host country. For instance, the tourism industry employs local citizens in hotels, restaurants, and entertainment and tourist services which cater directly for tourists or through the multiplier effect. Crucially also, many developing countries are dependent on the tourism sector as a major source of foreign exchange; even more so since such foreign exchange revenues often serve to contribute towards improving the host countries balance of payments (Belloumi, 2010). In this vein also, Robu and Ballan (2009) suggest that a growing national tourism sector contributes to increased national income and employment which effectively leads to an improved balance of payment situation. ILO Global Dialogue Forum on New Developments and Challenge (2010) reveals that the travel and tourism industry is the largest and most dynamic industry. Global economy is expected to generate about 9% of total GDP and provides more than 235 million jobs in 2010 representing 8% of Global employment. According to ILO report prepared for the Forum International Tourism was affected by the global economic and social crisis and expecting the tourism sections global economy to provide 296 million jobs by 2019. Tourism has the potential to become a major generator of job. Ajala.O.A. (2008) in his work on Employment and Income Potentiality of Tourism Development in Amhara region Ethiopia✁ examined the role of tourism development in socio- economic development of the region, generating foreign exchange, reducing unemployment and in improving the living standard of the people. The author has focused on Hotel industry, Souvenir, Tour guide, and water transport business. JagmohanNegi(2008)inhisbook ✁ Internationaltourismandtravel,conceptandprinciples discussedabout scope and composition of tourism and travel, types and characteristics of Tourism, tourism marketing policy, job structures in travel trade, tourist accommodation and tourism transportation facilities etc. ✁ Stephen J page, Joanne Connell (2006) in his book Tourism A Modern Synthesis identified the potential of tourism industry in Employment generation and examined the various determinants of employment creation in tourism, particularly the types of tourism.Resort Development will create variety of new jobs but may not always benefit more the local people.
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